23. Performance was under pressure in the short term, and the cost side rose due to pre-development and capital investment. The company achieved revenue of nearly 2 billion yuan in 23 years, an increase of 5% over the previous year. Revenue continued to grow slightly against the backdrop of consumer electronics shipments under pressure and fierce competition for new energy vehicle electronics. The company's new business growth is extremely high, and OCA optical adhesives and materials for new energy applications continue to be released. Net profit returned to mother in '23 was 0.56 million yuan, down 67% year on year. The large decline on the profit side was mainly due to major construction projects such as the company's OCA optical adhesive project, precision release film project, glue supply system technology transformation project, and PET optical film project line 2, which began to accrue depreciation, which in turn led to a sharp rise in related depreciation expenses and financial expenses. 23 In the first three quarters, the company accrued a total of 176 million yuan in depreciation, an increase of 63 million yuan over the previous year. Labor costs, R&D expenses, etc. also increased year-on-year. The company's profits are expected to gradually be released along with subsequent new depreciation and reduced cost pressure.
The three major businesses of “OCA+ New Energy+Microelectronics” have clearly grown, the volume and price of high-value-added products have increased, and the product structure has been continuously optimized. The company OCA optical adhesive has broken the monopoly of international giants and gradually achieved localization replacement. Folding OCA has been steadily mass-produced by many leading domestic mobile phone brands. Mainstream screen OCA is expected to break through mass production in 24. At the same time, the company continues to provide OCA optical adhesive products to North American VR glasses customers. Currently, Korean terminals are also being tested, and it is expected that the value of stand-alone machines will be further enhanced in the future through the application of OCA optical glue and film combination technology. In addition to OCA products, the company's new energy application materials have achieved two-dimensional growth in product categories and customer coverage. It is expected to continue to rise steadily in 24 years. Microelectronics products will also achieve a small amount of revenue. The three major emerging businesses have clearly grown, opening up room for upward growth. Thanks to this, 24Q1's revenue increased 37% year over year to 660 million yuan, and net profit to mother fell slightly by 8% year on year to 0.2 billion yuan.
The vertical industrial chain layout has been continuously improved to build an integrated industrial chain. The company is actively expanding upstream of the industry and is already able to make its own raw material products such as glue and release film to meet its demand for some high-end raw materials. In 23 years, 2 lines of optical substrates were put into mass production, continuously improving the self-production ratio of optical substrates and adhesives, getting rid of the dependence on overseas raw material supply, and creating an integrated “glue/base film - finished film - laminating film group - CNAS independent inspection” industrial chain, further reducing product costs and improving understanding of product lines and replicability of mass production, and further deepening technical barriers.
We forecast that the company's net profit for 24-26 will be $1.20/238/389 million yuan respectively (the original 24-25 forecast was $494/718 million, with the main reduction in revenue and gross margin forecasts and an increase in expense ratio forecasts). According to comparable companies' 25-year PE valuation level, the corresponding target price is 10.60 yuan, maintaining the purchase rating.
Risk warning
Increased market competition, OCA business falling short of expectations, risk of fluctuations in raw material prices, and risk of rising cost rates.